Suni Harford, Head of Investments

2018 has already brought with it a fresh set of challenges for investors. Market conditions year-to-date have contrasted, sometimes sharply, with the low volatility and lower-for-longer narrative that dominated the broader market backdrop for much of the post-financial crisis. Inflationary fears have raised their head in the US for the first time in a decade. Broad-based geopolitical risks are also notably more elevated.

Yet we should not forget that while the global growth impulse has become less synchronized, the residual growth rate remains above trend. Monetary policy outside of the US also remains accommodative.

Nonetheless, returns from risk assets are likely to be lower in the coming years than investors have been used to. Given the combination of macro-economic uncertainty and heightened geopolitical risk, it also seems likely that the overall volatility regime will be higher for all asset classes compared to the low levels of volatility in 2017.

We therefore see this as an environment in which investors will have to think differently, work harder, and be more precise in their quest for attractive risk-adjusted returns. We also believe that it is an environment in which high conviction active investing is likely to prosper.

This edition of Panorama therefore focuses on the approaches and opportunities that we believe can help investors navigate this environment.

With a breadth of insights across both traditional and alternative asset classes, we trust you will find our mid-year update thought provoking and helpful in facing the investment challenges that lie ahead. In an environment of heightened risk and opportunity, thinking differently is likely to be a key to success.